Port will pay $6.7 million to lure two cruise lines

Director expects big area economic impact from incentive agreements

By Kiah Collier

November 19, 2012Updated: November 19, 2012 10:59pm

Photo: Steve Ueckert, Staff

Image 1of/4

Caption

Close

Image 1 of 4

The Bayport Cruise Terminal on Port Road in Pasadena sits empty, Thursday. The cruise ship dock, which is of recent construction, was briefly used by the Carnival Line following damage to Galveston's docks in the wake of Hurricane Ike. Carnival has since returned to Galveston. Thursday, Nov. 13, 2008, in Pasadena. ( Steve Ueckert / Chronicle ) less

The Bayport Cruise Terminal on Port Road in Pasadena sits empty, Thursday. The cruise ship dock, which is of recent construction, was briefly used by the Carnival Line following damage to Galveston's docks in ... more

Photo: Steve Ueckert, Staff

Image 2 of 4

The Port of Houston Authority's Bayport Cruise Terminal still has no ships two years after being built as seen on Thursday, July 22, 2010, in Houston. ( Julio Cortez / Chronicle )

The Port of Houston Authority's Bayport Cruise Terminal still has no ships two years after being built as seen on Thursday, July 22, 2010, in Houston. ( Julio Cortez / Chronicle )

Photo: Julio Cortez, Staff

Image 3 of 4

he Port of Houston Authority, use with our daily Saturday on the Bayport cruise terminal,It shows a Carnival ship docking there during the aftermath of Hurricane Ike

he Port of Houston Authority, use with our daily Saturday on the Bayport cruise terminal,It shows a Carnival ship docking there during the aftermath of Hurricane Ike

Photo: emial - marl babineck

Image 4 of 4

Leonard Waterworth said the port could not have attracted the cruise lines without an incentive.

Leonard Waterworth said the port could not have attracted the cruise lines without an incentive.

Photo: Patric Scheider, Freelance

Port will pay $6.7 million to lure two cruise lines

1 / 4

Back to Gallery

The Port of Houston Authority will pay Princess Cruises and Norwegian Cruise Line a combined $6.7 million through 2016 to operate out of the long-empty Bayport Cruise Terminal, Executive Director Leonard Waterworth said Monday.

Under the contracts the authority expects to finalize this week, the cruise lines also will not be required to pay rent or any kind of docking fee to use the $108.4 million facility in Pasadena.

Last week, port commissioners announced a one-year agreement with California-based Princess and a three-year agreement with an option to renew with Florida-based Norwegian, which used to call on a terminal at Barbours Cut but left in 2007.

In an interview, Waterworth said he considers the $50 million-a-year economic impact the cruise lines are expected to generate as sufficient to justify the incentive - $685,000 to Princess and $6 million to Norwegian to fund startup and marketing efforts.

Translator

To read this article in one of Houston's most-spoken languages, click on the button below.

"You're not going to walk away from that deal after leaving the cruise terminal empty since 2007," said Waterworth, who said the authority "could not have successfully attracted" the cruise lines "without such a commitment."

The authority will pay for the incentive from its operating revenue, which totaled $204 million in 2011.

Waterworth said the incentive equals 3.5 percent of the $200 million total economic impact the cruise lines are expected to generate in the four years covered by the contracts, below the 5 percent maximum in incentives considered common by many in the private sector. Nearly 100 new jobs are also expected, according to figures provided by the authority.

That "3.5 percent out of $200 million is much better than 100 percent of zero," he said, referring to the amount the authority has generated from the empty cruise terminal, which had become a symbol of waste and poor decision-making for the authority's critics.

The only time cruise ships have called on the 96,000-square-foot terminal was for several weeks in 2008 after Hurricane Ike damaged the Port of Galveston.

These agreements would be the first regular cruise service.

Officials say the authority has made just enough revenue from allowing some ships to dock there to pay for the electric, maintenance and insurance bills - about $500,000 a year - and so has effectively broken even.

Waterworth said he would be hesitant to offer economic incentives to other cruise lines but would consider it if it makes business sense.

"I am not going to limit myself," Waterworth said.

The agreement with Princess is for the 2013-2014 season with 27 planned departures; the agreement with Florida-based Norwegian begins in 2014 and spans a total of 75 departures.

The latter includes an option for a two-year extension. About 275,000 passengers are expected between 2013 and 2017.

Waterworth said the incentive to Norwegian is much higher because its contract is longer and this is the first time it will return to the Gulf Coast since it left in 2007, so it will cost more for the company to set up shop than it will for Princess, which already operates out of Galveston.

Princess' inaugural trip on the 3,080-passenger Caribbean Princess, a benefit cruise to support veterans, is scheduled for Nov. 5-9, 2013.

In the fall of 2014, Norwegian Cruise Lines will begin operating the 2,374-passenger Norwegian Jewel from Houston on weeklong cruises to the western Caribbean.